Guest Column| Balancing autonomy, centralisation: Federalism’s evolving policy dynamics

Federal systems face the unique challenge of balancing national coherence with state autonomy. This challenge is intensified these days due to evolving governance imperatives and diverse regional demands. While evident in countries like the United States, Canada, and Australia, this balancing act is particularly complex in India, where a vast array of cultures and economic conditions coexist.

Federalism is not just a structural arrangement; it embodies political values surrounding governance, autonomy, and authority. Different political ideologies shape the design and operation of federal systems. Liberalism typically favours decentralised governance to protect individual freedoms and prevent the concentration of power, while conservatism emphasises national unity and social order. Socialist ideologies advocate for centralised control to promote equity but may also support preserving regional identities in culturally diverse nations. Neoliberal federalism, driven by globalisation, presents both opportunities and challenges, as economic competition between states can deepen inequalities. In India, the rise of right-wing politics has reinforced centralisation trends, reminiscent of previous periods of socialist dominance.

Unity in diversity

Identity politics often intersect with federalism, particularly in regions marked by ethnic, linguistic, or cultural diversity. In these contexts, federalism can help preserve regional identities while maintaining national cohesion. India’s federal structure, with state boundaries drawn along linguistic lines, reflects a commitment to recognising these identities within a unified nation-state. This model balances the country’s rich cultural diversity with the imperative of national integrity.

India’s transition from a centrally planned economy to a liberalised framework exemplifies the ideological evolution of its federalism. Earlier, socialist policies favoured strong central control, whereas the economic liberalisation of the 1990s empowered states with greater autonomy in economic and industrial matters. This shift has sparked tensions between central authority and state autonomy, particularly in sectors like education and agriculture. Some scholars argue that federalism was more vibrant during the coalition governments of the late 20th century, despite concerns about governance quality during that era.

Robust coordination

Effective federal systems are adaptable, responsive, and grounded in decentralisation and autonomy. Evidence-based policymaking is crucial for developing strategies that respect the diverse needs of both national and state governments. However, effective policymaking in federal systems requires robust coordination between central and regional governments. Stakeholder consultations and participatory institutions are essential for crafting policies that reflect the varying needs of different governance levels. Mechanisms, such as the comptroller and auditor general (CAG), ensure accountability by monitoring and evaluating policy implementation, identifying inefficiencies, and recommending improvements. Such institutions help keep policies relevant and responsive to evolving challenges.

The tension between centralisation and state autonomy recurs throughout federal systems. India’s adoption of the Goods and Services Tax (GST) in 2017 is a glaring example. While the GST replaced numerous state-level taxes with a unified tax regime, the GST Council, comprising representatives from both central and state governments, provides a platform for states to participate in taxation policy. Nonetheless, concerns over revenue-sharing persist, with some states arguing that the central government’s control over tax distribution undermines their fiscal independence.

Tracking federal drift

A growing concern in India—and in other federal systems like the United States—is the phenomenon of federal drift, where power gradually shifts from states to the central government. In the US, federal encroachment into traditionally state-controlled areas, such as education and healthcare, has drawn criticism. Supreme Court rulings on issues such as abortion and voting rights exemplify this trend, as does the expansion of federal regulation under the Joe Biden administration in areas such as climate policy and healthcare. Australia has similarly raised concerns regarding GST revenue distribution and the influence of the national cabinet in decision-making.

In India, the introduction of new farm laws, the Citizenship Amendment Act (CAA), and the National Education Policy (NEP) 2020 sparked debates over federal drift. While significant federal drift was seen during the internal Emergency of 1975, the current drift — marked by increasing intervention from central agencies like the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) in state affairs — is persistently debated and critiqued. Political scientists argue that these interventions undermine state autonomy in critical areas such as education and governance.

However, another school of thought maintains that these actions aim at conserving resources, improving governance quality, and fostering cohesive governance. Proponents of this view also support the idea of ‘One Nation, One Election,’ which many others believe reflects a unitary governance approach.

Evolve and adapt

Federal systems must continually evolve and adapt to new governance imperatives, such as demands for transparency, public participation, and efficiency. The GST reform in India, for example, aimed to streamline tax collection and promote economic integration across states. The formation of the GST Council exemplifies a federal approach to balancing national and regional fiscal concerns. Similarly, Australia’s evolving GST system illustrates how fiscal policies can be adjusted to address the specific needs of individual states while maintaining overall national coherence.

Effective policy making in federal systems requires a nuanced balance between central authority and regional autonomy. This balance can be achieved through data-driven decision-making, collaborative governance, and the inclusion of diverse stakeholder perspectives. However, the increasing trend of federal drift threatens to disrupt this equilibrium as central governments seek to enhance national coherence, sometimes at the expense of regional diversity.

To preserve the fundamental principle of state autonomy, federal systems must remain vigilant against centralisation. Successful policymaking fosters collaboration between central and state governments, respects regional variations, and remains flexible in the face of emerging governance challenges. The ongoing balance between autonomy and centralisation will continue to shape the future of federalism. Maintaining this equilibrium is essential for the resilience of federal systems in an increasingly complex global landscape. If this balance is not preserved, coalition politics — with smaller, assertive regional players —may once again dominate national governance, reshaping the political discourse and potentially altering the future of federalism itself. sureshkumarnangia@gmail.com

(The writer is a retired Punjab-cadre IAS officer. Views expressed are personal).